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What You Should Know About a Bitcoin Collapse

By

Eric P. Newcomer

Jan 02, 2014
12:31 PM PST

If it turns out that Bitcoin is a flash in the pan and the value of the cryptocurrency collapses, what would that look like? Who would get back some of the money they invested in Bitcoin and who would be left with nothing? What are the most likely events that would send the price spiraling downward?

We posed these questions to academics and Bitcoin buyers, many of whom firmly believe that Bitcoin is here to stay, despite the recent volatility in price. Still, many investors acknowledge that the possibility of its demise is real. Investors may lose confidence, particularly if several major governments declared Bitcoin illegal.

When Bitcoin prices fall, not all sellers are equal. Ones with access to private buyers may be able to sell more quickly. Prices can vary in different countries and on different exchanges.